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Commissioner, 17 T.C. 740 (1951). We do not believe petitioner
has shown that the purported debt had value at the beginning of
1992. The undisputed terms of the Redemption Agreement provide
for the forgiveness and release of all claims that Lakeview,
William, or petitioner may have had against each other as of the
execution date, which was March 20, 1991 (except for a debt owed
by Lakeview to William, acknowledged in the Agreement). The
actions of William that petitioner contends gave rise to the
purported debt, i.e., the skimming of cash (of which petitioner
was aware) and the conversion of the car and trade-in payment to
personal use, all occurred prior to the execution of the
Redemption Agreement. Thus, any debt arising from William's
skimming and conversion was forgiven by Lakeview on March 20,
1991. The debt had no value at the beginning of 1992.
Even if William's purported debt to Lakeview somehow
survived the release in the Redemption Agreement, petitioner has
failed to show that it became worthless in 1992. Petitioner
contends that he had sufficient evidence of the worthlessness of
the debt in 1992 based on the advice of his attorney that the
cost of collecting the debt would have exceeded its value. In
making this argument, petitioner concedes that William had
sufficient assets from which to collect the debt that petitioner
claims was owed to the corporation.6
6 The record is clear that William had sufficient assets
from which to pay the alleged debt in 1992. In the previous
year, William had received $42,579.75 from Lakeview in addition
(continued...)
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